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We depart this year from our usual practice for MR’s July–August double issue. Instead of a collection of articles on a common theme, we are devoting the issue to a single manuscript—a study of China and economic development theory by Martin Hart-Landsberg and Paul Burkett that will be published in book form by Monthly Review Press early next year. Although there are numerous books on China, this one is especially worthy. It is a careful, clear, well-grounded Marxist study of how a major post-revolutionary society turned away from socialism. In addition, the current transformation in China throws light on why capitalism, by its very nature, creates poverty, inequality, and ecological destruction in the process of economic growth.

Socialism cannot be created overnight. A long transition is needed to build its political, human, and economic foundations. If we are to learn from the past, we need critical and ruthless analyses of the post-revolutionary societies, their achievements as well as failures. It should be evident by now that a transfer in class power can make a real difference. That shows up during the early days of a move to a new social system: elimination of hunger, creation of full employment, the spread of literacy, universal education and medical care for all the people, and an escape from imperialist domination. These steps toward social justice are not easy. Moreover, booby traps may slow and divert further progressive and radical changes.

The transition to full-fledged socialism entails a long and bumpy road full of pitfalls and contradictions. Time is needed to: (a) convert existing productive forces into worker-controlled and peasant-controlled enterprises, (b) create new productive forces for the basic needs of the entire population, and (c) construct a legal-political-cultural superstructure adapted to a cooperative commonwealth. Shortcuts are few and far between. Nor can general recipes be designed that will suit every country and anticipate every twist and turn of history. Room must be provided for a process of trial and error, which means informing and involving the masses, including the power of the masses to recall administrators and correct errors.

The socialist vision encompasses a nonhierarchical, egalitarian society—one which strives to improve the living standards and quality of life, with top priority given to the poorest, most discriminated against, and powerless. Thus, the dominant tendency in China during roughly the first 30 post-revolutionary years was to dedicate resources and effort to achieving equality and meeting the basic needs of the people, especially those of the downtrodden. By the end of the 1970s (covering roughly the first three decades after the revolutionists came to power), China had become a highly egalitarian society, arguably the most egalitarian on earth in terms of the distribution of income and in meeting basic needs. Since then, however, a striking turnaround has taken place—in fact as in theory. The heads of the party and the government encouraged a blossoming of private industry via domestic and foreign investment. A turn to so-called market socialism was proclaimed. The U-turn in the ruling ideology was dramatic. Market socialism, it was said, would lead to speedy growth of material production, a growth of riches that would inevitably trickle down to all social sectors.

China’s new course has indeed resulted in an extremely rapid increase of production and total national income. However, the wealth created didn’t trickle down very far. The result is a very rich upper stratum and a comfortable middle class, and as for the rest: poverty, insecurity, unemployment, and a decline in education and medical care. The effect of the turnaround is finally acknowledged in official circles. Last year the political department of China’s Ministry of Finance issued a report on the subject. People’s Daily Online (June 19, 2003) ran an article containing the substance of the document. The article began by acknowledging that the government report had revealed: (1) “A ceaseless widening of the gap in income distribution and the aggravated division of the rich and the poor is occurring” and (2) “Amassed wealth is becoming more concentrated, with the difference of family fortunes becoming bigger and bigger.”

What is clear from the Chinese experience is that the basis of the class struggle continues even after nationalization of business institutions. The mentality (ideology) of the old society does not evaporate into thin air after a revolutionary change. It remains and conflicts with the socialist road. Other strains arise from the potential and actual entrenchment of a bureaucratic elite, the persistence of hierarchy, and the complexity of building a people’s democracy. The bureaucratic elite and other privileged groups sustain a competing ideology—one that justifies their privileges, which are at odds with the needs of the mass of the people. Members of the elite are commonly concerned with passing on their advantages to their children, typical of class society. The clash of class interests continues from generation to generation. In this way the class struggle persists, though in different forms from the past. At heart, as Mao pointed out, even some in high Communist Party positions wanted to take the “capitalist road.”

The ideological struggle that takes place is linked with differences over the rate and direction of growth. Unfortunately, growth in itself is the deity worshipped by “capitalist roaders,” whereas the crucial questions are: What kind of growth? For what purpose? For whose benefit? Should the growth be geared to satisfying the desires of intellectuals, managers, business owners, and the bureaucratic political groups and classes? Or, should the direction of growth be oriented towards improving living standards and quality of life for the mass of the people?

We can’t discuss these questions in this space as fully as they should be. But some aspects need to be mentioned. Growth may be badly needed: houses for the homeless, medical centers, three meals a day for everyone, sewage and running water in the slums and ghettos, and so on. However, too speedy growth may be harmful to people and the environment. These are basic questions that distinguish between capitalism and socialism. Under capitalism, driven by profit for the few, accumulation occurs on a world scale while the great majority of the world’s masses are plunged into misery. And as shown by Hart-Landsberg and Burkett, the Chinese case is witness to the fact that growth with the purpose of increasing profits, or growth merely for the sake of growth, leads inevitably to stark social inequality.

The book-length essay that makes up this issue of MR is also significant in that it boldly confronts a fad in left-wing circles: a faith in “market socialism” as the proper and effective way to replace capitalism. Economic planning, it is claimed, has proven to be a failure: it just can’t work. The issue is seen as a matter of technique—finding the right mechanism (plan or market), rather than a question of class or of meeting the most pressing human needs. Technocrats are supposed to have the answers—in this case a reliance on the magic of the market. But look at the Chinese success story! The theorists’ enthusiasm for market socialism is small beer compared with the excitement that today’s Chinese market has generated. Conventional pundits and corporate CEOs, who in their greed see only the fabulous riches being created and there for the taking, are blind to the real conditions of the people. CEOs are enthralled by the profit opportunities: on the one hand, an exceptionally large low-wage industrial reserve army, and on the other hand, untold millions of potential customers. Left and right revel in the exceptional, ongoing rates of economic growth. Nowhere is the enormous and continuing human cost of this distorted system of growth considered.

The issue can be approached in a simplified fashion. A national economy has two parts, consumption and investment. If more is spent on investment, less will be available for consumption. Economic growth depends on an increase in investment, aided by increases in labor productivity. But an increase in investment, especially when extremely rapid, will slow any increase in consumption by the masses. Although consumption as a whole may increase, consumption of the wealthy inevitably occurs at the expense of the poor when there are big differences in power and wealth. To the extent that a section of the population is able to spend much more than others, investment as well as production will concentrate on luxury goods and facilities for the wealthy. The Chinese government report referred to above (summarized in People’s Daily Online) acknowledges that the gulf between the classes is increasing with the unusually fast growth: “A ceaseless widening of the gap in income distribution and the aggravated division of the rich and the poor is occurring.”

The growing polarization in income and wealth and the slower increases (if any for the lower strata) in consumption among the masses are not the only negative consequences of ultra-fast growth. The shift to so-called market socialism followed the path dictated by capitalist globalization. According to the Financial Times, (May 4, 2004) “China [is set] to join the league of biggest direct investors abroad.” Vice Premier Wu Yi, “in a written statement to the ongoing forum on ‘going global’ of Chinese enterprises [sponsored by the Ministry of Commerce] said this strategy will benefit not only China’s development but also the prosperity of the whole world” (reported in the People’s Daily Online, May 26, 2004). Moreover, the same source reports that China is promoting its transnationals: “China will further promote the ‘going global’ strategy and nurture more transnational companies, senior officials said.” Government authorized foreign investment by Chinese firms was over $2 billion in 2003 and is expected to grow rapidly.

Another consequence of worshipping at the idol of rapid growth is the resulting ecological havoc. As the deputy director of China’s State Environmental Administration, Pan Yue, has put it, “If we continue on this path of traditional industrial civilisation, then there is no chance that we will have sustainable development…[b]ecause China’s populace, resources, environment has already reached the limits of its capacity to cope” (New York Times, May 24, 2004). The dammed Yangtze River has become a cesspool of sewage, poisoned because of nonexistent or inadequate treatment of industrial and human wastes. And according to Elizabeth Economy, senior fellow and director for Asia studies at the Council on Foreign Relations,

There has been a dramatic increase in the demand for natural resources of all kinds, including water, land, and energy. Forest resources have been depleted, triggering a range of devastating secondary impacts, such as desertification, flooding, and species loss. At the same time, levels of water and air pollution have skyrocketed…More than 75% of the water in rivers flowing through China’s urban areas is unsuitable for drinking or fishing. Sixty million people have difficulty getting access to water, and almost three times that number drink contaminated water daily. Desertification, which affects one-quarter of China’s land, is forcing tens of thousands of people to migrate every year…. (China’s Environmental Challenge:
Political, Social and Economic Implications)

China has seven of the ten cities with the most air pollution in the world, and has 300 cities that fail to meet acceptable levels for total suspended particulates as defined by the World Health Organization.

To summarize our argument—once a post-revolutionary country starts down the path of capitalist development, especially when trying to attain very rapid growth—one step leads to another until all the harmful and destructive characteristics of the capitalist system finally reemerge. Rather than promising a new world of “market socialism,” what distinguishes China today is the speed with which it has erased past egalitarian achievements and created gross inequalities and human and ecological destruction. In our view, the present essay by Martin Hart-Landsberg and Paul Burkett deserves careful study as a work that strips away the myth that Chinese socialism survives in the midst of some of the most unrestrained capitalist practices. There is no market road to socialism if that means setting aside the most pressing human needs and the promise of human equality.